False Trading Beliefs --- I know some, do you ?

What are the false trading beliefs you know of? If you do not know any false trading beliefs, then assuming their non existence might be one.

I know of a number of false trading beliefs. Do you want me to share? I would bet you do, but before I write them I thought to ask others to share the trading beliefs they know/think are false.

 

That you can trade.

 

I agree with you. It applies even if one were to have a positive expectancy system.

PS: Some of you might be wondering something like: how come this TJ guy always succeed in starting some very interesting and attention grabbing threads which may make sellers of financial services and owners of financial websites green with envy as they know it is something they lack and cannot buy? Is there a market for threads like TJ;s threads?

 

Let me put a question for debate: do you belief that positive expectancy exist? Do believe that negative expectancy systems exist? (assuming no spreads, and no commissions in thinking about the two questions).

The answer might surprise you. I have planned to start a thread (titled "It is NOT the trading system stupid") that touches on this question.

 

That you can predict the future by looking at past events.

 

http://www.elitetrader.com/vb/showthread.php?s=&threadid=221311&perpage=30&pagenumber=6

That a newbie can start a fake $100 journal and turn it into $100,000.

This is one I learned just recently.

 

This is not a false belief. It is in harmony with the laws of nature. Both Relativity Theory and Quantum Mechanics, out two most celebrated theories, desribe fully deterministic systems. Knowing the past is sufficient for knowing the future. The problem is with the models. You get what you pay for. If you think that you will buy a $200 charting program and backtest some systems and make money then you are dreaming when hedge funds employ PhDs and pay them fat salaries to do the same thing.

Thus, the false belief is that you can compete with little money down.

 

Most of them do not even trade direction, ever heard of algotrading and statistical arbitrage?

Very few hedge funds that trade direction have outperformed the market in the long run, thats evidence that the future cannot be predicted.

 

There are no wrong beliefs. TAKE THAT!!

 

Those massive macro funds trade direction
Long/short funds trade direction (at least on a stock specific basis)

And these are the two largest hedge fund categories.